Five ways the Liberal Democrats could do more to reduce poverty

In the third of our party conference blogs, Helen Barnard looks at whether the Lib Dems’ plans for their next manifesto will reduce poverty.

Nick Clegg has just brought the Liberal Democrat conference to a close, centred around two goals: creating a stronger economy, and a fairer society. Our evidence demonstrates that reducing poverty is crucial to achieving both goals.

Poverty is a cost the UK cannot afford: it wastes human potential and public funds. Child poverty costs the country £29 billion each year. Working tax credits subsidising low pay cost more than £6 billion in 2012/13 alone.

As we set out in A UK without poverty, we need a coherent anti-poverty strategy that tackles the causes as well as the consequences of poverty. Discussions in the conference hall seemed to recognise this situation. So how did the Lib Dems’ policy papers stack up against the evidence of what’s needed to reduce poverty?

  1. Raising the personal tax allowance: The principle of letting people on low incomes keep more of what they earn is right. However our research shows that further personal allowance rises are expensive and poorly targeted. The best way to help those in poverty and make work pay is to increase the amount that a family can earn before tax credits start to be withdrawn. 
  2. Welfare reform: The issues raised at the conference are the right ones: we support the principles behind Universal Credit but it needs some key changes to make sure work truly pays. The Lib Dems want to incentivise increased hours of work, reform the Hardship Fund, use sanctions as a last resort and improve assessment and support for people with disabilities. As well as improving the welfare safety net, these changes would make work a better route out of poverty. 
  3. Industrial policy: The Lib Dems’ industrial strategy for high-skill sectors is welcome and will support progression in work. But we believe tackling in-work poverty requires equal weight to be given to a strategy for low-paid, low-skilled sectors, such as retail, care and hospitality. 
  4. Education and childcare: The introduction of the Pupil Premium has been a great start and should definitely be continued. The plan to triple the Early Years premium is well targeted to support children in poverty and help close the attainment gap. The Lib Dems are right to focus on improving the quality of teaching and childcare, but they need to develop more convincing plans to deliver and pay for it. We also need to better link initiatives in education to wider moves to reduce poverty and disadvantage.  
  5. Housing: We welcome the Lib Dems’ focus on action to increase the supply of housing, improve the rights of private renters and reform taxation. But we need to be building at least 250,000 new homes a year, with 83,000 of these at affordable rates, as we also outline in A UK without poverty. We also support the current Bill to restrict the Spare Room Subsidy (the so-called ‘bedroom tax’) to people who have been offered alternative accommodation. 

There are two areas not yet fully addressed at conference which our evidence suggests are crucial to reducing poverty. First is reducing the cost of essential goods and services. Action on high housing and childcare costs could go a long way to helping the poorest families.

Second is improving the quality of jobs at the bottom end of the labour market and encouraging employers to fully use their workers’ skills. The Lib Dem’s current plans are showing signs of promise but do not yet amount to a coherent strategy to reduce poverty. The Pupil Premium is a strong example of a policy dealing with a root cause of poverty, targeting resources at those in the greatest need. But such initiatives in isolation risk being undermined by measures which fail to benefit those who are worst off, and by a lack of coherence. Without a joined-up approach, poverty is forecast to rise to one in four working adults adult by 2020, and one in three children.

  • JRF has attended all three parties’ conferences